What happened last time? › Combinations
What happens when inflation is above 5% and the Fed has just raised rates?
It has happened 14 times since 1946. A year after it began, the S&P 500 was up 7 of 14 times, with a median move of -0.5%. On an ordinary day in the same years the median was +10.2%, up 74% of the time.
CPI inflation above 5% a year · a Fed rate hike in the last 30 days. Not true on 2026-09-25.
What came next
| 1 month later | 1 year later | 3 years later | |
|---|---|---|---|
| S&P 500 | +0.4% 57% up · n 14 · normal +1.1% | -0.5% 50% up · n 14 · normal +10.2% | +28.4% 93% up · n 14 · normal +28.5% |
| Gold | +1.5% 67% up · n 12 · normal 0.0% | +3.9% 67% up · n 12 · normal +2.9% | +12.3% 58% up · n 12 · normal +10.4% |
| Oil | -0.2% 8% up · n 12 · normal 0.0% | +1.8% 58% up · n 12 · normal 0.0% | -0.7% 50% up · n 12 · normal +8.9% |
| 10-year yield (pts) | +0.01 pts 50% up · n 12 · normal +0.01 pts | +1.15 pts 83% up · n 12 · normal +0.09 pts | +0.62 pts 58% up · n 12 · normal +0.06 pts |
| Inflation, CPI y/y (pts) | +0.04 pts 54% up · n 13 · normal -0.00 pts | -0.28 pts 43% up · n 14 · normal -0.02 pts | -2.95 pts 29% up · n 14 · normal -0.05 pts |
| Unemployment rate (pts) | 0.00 pts 38% up · n 13 · normal 0.00 pts | +0.10 pts 54% up · n 13 · normal -0.20 pts | +1.90 pts 92% up · n 13 · normal -0.40 pts |
Median move after each episode began, how often it rose, and how many episodes had data. "Normal" is the same move from any trading day in the same years.
Every time it happened
- 2022-03-17 · true for 181 trading days · S&P 500 a year later: -11.2%
- 1989-05-18 · true for 20 trading days · S&P 500 a year later: +11.5%
- 1981-05-05 · true for 21 trading days · S&P 500 a year later: -9.7%
- 1980-09-26 · true for 53 trading days · S&P 500 a year later: -10.7%
- 1980-02-15 · true for 20 trading days · S&P 500 a year later: +10.0%
- 1979-07-20 · true for 75 trading days · S&P 500 a year later: +19.9%
- 1978-05-11 · true for 112 trading days · S&P 500 a year later: +1.4%
- 1978-01-09 · true for 22 trading days · S&P 500 a year later: +9.6%
- 1977-08-30 · true for 42 trading days · S&P 500 a year later: +7.4%
- 1974-04-25 · true for 22 trading days · S&P 500 a year later: -3.3%
- 1973-05-22 · true for 70 trading days · S&P 500 a year later: -15.9%
- 1969-04-15 · true for 14 trading days · S&P 500 a year later: -14.6%
- 1948-08-13 · true for 20 trading days · S&P 500 a year later: -2.4%
- 1948-01-12 · true for 26 trading days · S&P 500 a year later: +2.2%
- 14 separate episodes: a new one starts after 30 days without a match, so one long selloff counts once.
- Try enough situations and one will look like an edge by chance.
- Macro numbers are as published at the time. Stocks include companies that later died.
- How these numbers are made.
More about combinations
- What happens when stocks fall 10% in a month while inflation is above 4%?
- What happens in a bear market when the Fed starts cutting?
- What happens in a bear market during an announced recession?
- What happens in a bear market with no recession announced?
- What happens when the yield curve is inverted and unemployment is rising?
- What happens when oil rises 50% in a year and inflation is above 5%?
- What happens when the VIX is above 40 and the Fed has just cut?
- What happens when gold rises while stocks fall?